Money Talk: Centurion Corporation, CSE Global, Straco Corporation

SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.

1. Centurion Corp

Broker: OSK-DMG

Centurion Corporation has acquired a piece of land located at Seberang Perai Selatan in Penang, Malaysia for $2.45 million. This marks the Group's first acquisition in Malaysia outside the state of Johor.

The plot of land is strategically located at the fringe of Bukit Minyak Industrial Park, which houses notable multinational companies like Flextronics Technology and JCY HDD Technology. The proposed acquisition is subject to receipt of consent from the State of Penang, and is expected to be completed in Q4.

Post seeking approval to convert the land from its current agricultural purpose to workers accommodation development, Centurion intends to build a 5,000 bed workers dormitory managed under the Westlite brand. Construction period is expected to take about 2 years.

Maintain Buy with a target price of $0.91.

2. CSE Global

Broker: OCBC

CSE Global reported a 6 per cent year-on-year decline in its net profit from continuing operations to $8 million despite a 16.3 per cent jump in revenue to $108.1 million. The former fell short of our expectations, largely due to a higher-than-expected effective tax rate.

An interim dividend per share of 1.25 cents was declared. CSE also registered a downtrend in its order backlog, but management maintained optimistic on its prospects. It reiterated its target of growing its core net profit by 10 to 15 per cent organically in FY2014.

We lower our FY2014 and FY2015 core net profit forecasts by 4.9 per cent and 1 per cent, respectively. As CSE's share price has performed well since our last update, we believe its share price has now run ahead of its fundamentals.

Hence, we downgrade CSE to Hold, with a revised fair value estimate of $0.64 (previously $0.63).

3. Straco Corporation

Broker: CIMB

Straco's first-half net profit formed 39 per cent of our full-year forecast, which we deem in line as the second half of the year is seasonally stronger (peak season falls in Q3 and typically accounts for 45 per cent of the year's net profit).

Visitor arrivals at its aquariums surprised on the upside, driven by favourable government policies that incentivise domestic travel. However, forex losses continued to hit the bottomline as the yuan appreciated against the Singapore dollar, bringing net profit closer to our estimates.

Our target price rises to $0.96 after we tweak our FY2014-2016 earnings per share forecasts and remove the liquidity premium.

Possible re-rating catalysts are potential acquisition of a tourism asset in Asia, better capacity utilisation and potential ticket price revisions. Maintain Add.